- Compliance with securities law will add another layer of complexity running a small business
- Principals may be personally liable and subject to lawsuits by shareholders
- Shareholders will demand accountability from principals
- Venture Capital may not want to get involved with a company who initially raised capital with crowd funding.
- Transaction cost
Today the House passed the Jobs act (HR 3606). Presumably President Obama will sign this bill into law, making crowd funding legal. This is a huge gain for entrepreneurs and small investors.
For the individual investor this means access to new companies that have promising ideas that could change the world while making a profit.
For entrepreneurs, this will making the raising of capital a little easier. Additionally, new companies can pre-sell their ideas/products to their eager consumers/investors.
It’s a very exciting time to be starting something new in the United States.